In his post Key terms in a termsheet Part 2, Nic covered the basics of anti-dilution. In that post he wrote that there are three flavours of anti-dilution:

Full ratchet

Narrow-based weighted average

Broad-based weighted average

In this post Nic goes into a little more detail on each of the three mechanisms. In a very thorough explanation, he provides a typical mathematical formula for each type of anti-dilution and a worked example.

About Nicholas Lovell

Nicholas is the founder of Gamesbrief, a blog dedicated to the business of games. It aims to be informative, authoritative and above all helpful to developers grappling with business strategy. He is the author of a growing list of books about making money in the games industry and other digital media, including How to Publish a Game and Design Rules for Free-to-Play Games, and Penguin-published title The Curve: thecurveonline.com

About

Gamesbrief is a blog about the business of games. We look behind the headlines to tell you not just what is happening to games, but why it matters to your business. From Activision to Zynga, we analyse the companies who are making waves in the games industry and the new platforms, like Facebook, iPhone and Unity, that are changing the market.

Testimonials

“Nicholas Lovell‘s one-day workshop was comprehensive, insightful, creative and entertaining, but more than that it was inspirational. Nobody understands how games can be monetised like him, and nobody explains it better.”James Wallis, Hypergame,